The Microfinance Delusion: Explaining the Destructive Rise of Local Neoliberalism

A growing number of analysts are now of the opinion that microcredit constitutes a ‘poverty trap’.

Abstract:

Microcredit was once universally lauded in international development community circles as a ‘magic bullet’, and by the early 2000s it was probably the most popular international development policy of all time. In 2006 its most famous advocate – Dr Muhammad Yunus of Grameen Bank fame – was awarded the Nobel Peace prize. In recent year, however, the microcredit model has been re-examined and increasingly challenged. A growing number of analysts are now of the opinion that microcredit constitutes a ‘poverty trap’. Apart from achieving nothing in terms of genuinely reducing poverty, as even long-time advocates now fully accept, into the longer term the microcredit model has also been exposed as adding considerable impetus to the hugely damaging de-industrialisation, informalisation, disconnectedness and primitivisation trends underway in many developing countries. Put simply, the microcredit model has been very effective at ‘dumbing down’, rather than ‘scaling up’, those communities, regions and countries in which it has achieved the most penetration. Needed progress towards greater trust, equality, solidarity, reciprocity, mutual support and social justice has also been undermined and blocked by the increasingly Wall Street-style greed-driven operations of those financial institutions and commercial banks providing microcredit to the poor.

In this talk, Milford Bateman argues that the microcredit model constitutes one of the most important international development policy blunders of all time. Microcredit should really be viewed as the developing world’s very own sub-prime-style disaster which, like the US version, has mainly served to suck up value from the poor in order to benefit a tiny financial elite working within and around the microcredit sector, whilst simultaneously destroying many of the most important functional pillars of the economy and society. To explain the rise and continuing popularity of the failed microcredit model in international development circles, it is necessary to look to the politics and ideology that nurtured the microcredit model, and specifically to the ascendance of the neoliberal project in the 1980s and its celebration of all forms of individual entrepreneurship and self-help.

Speaker:

Milford Bateman, author of 'Why Doesn't Mircrofinancne Work?'

Discussants:

Thankom Arun, Professor of Development Finance and Public Policy, University of Central Lancashire 

Jason Hickel, Research Fellow, Department of Anthropology, London School of Economics and Political Science

Milford Bateman’s talk will be followed by a response by the two discussants and open Q&A session.

The lecture will be follwed by a wine and drinks reception.

Registration:

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